Turmoil as VW and RSA see shares dive amid double dose of bad news

Shares in Volkswagen plunged the most in almost six years in Monday trading after U.S. authorities accused the German carmaker of falsifying emissions data, which means it could face penalties of up to $18 billion. Europe’s largest automaker is accused of designing software for diesel models of its core VW brand and luxury division Audi that deceives regulators measuring toxic emissions, the U.S. Environmental Protection Agency said on Friday. VW shares fell 13% to €140.95 in early trading, the biggest one-day drop since November 2009. VW has called a halt to sales in the U.S of its 2015 and 2016 Audi and VW vehicles with 4-cylinder diesel turbo engines.

This disaster is beyond all expectations.

Ferdinand Dudenhoeffer, at the University of Duisburg-Essen

Meanwhile, Zurich Insurance abandoned its proposed £5.6 billion bid for Britain’s RSA on Monday, after forecasting a $200 million (£129 million) third-quarter loss largely due to the devastating explosions at the Chinese port of Tianjin. A day before a bid deadline under British takeover rules, Zurich said it would conduct a review to improve the performance of its general insurance business, instead of taking over its London-listed rival, sending RSA shares down by as much 23%. Analysts were doubtful other bidders would come forward to buy RSA, after European rivals Allianz and AXA, which like Zurich offer both life and general insurance, had indicated they were not interested.

Given the deterioration in profitability … CEO Kristof Terryn is conducting an in-depth review of the business.

Zurich statement